Conflicts that Plague Family Businesses
Updated: Sep 8
Back in 1971, the Harvard Business Journal published an article on conflicts that tend to plague family businesses. The article was written by Harry Levinson, founder of The Levinson Institute and clinical professor of psychology emeritus in the Department of Psychiatry, Harvard Medical School. Levinson passed away in 2012.
Levinson’s article focused not only on common family business conflict scenarios but on the psychology behind these conflicts. Ironically, not much has changed since the early ‘70s. The insights contained in this article are just as valid today as they ever have been. In the almost 50 years since its publication, is it possible that we have learned so little?
The truth is, despite technological advances and the ever-changing dynamics of the social world, we are still human. Our physiology hasn’t changed, nor has the general framework of the family unit itself. While the way we organize and communicate might have shifted a great deal, we still generally have the same goals of emotional fulfillment, satisfying a sense of purpose, and providing for our family’s future.
Of course, not all families have the types of conflicts we’re going to talk about, but those that do face an uphill climb – at least, if succession is the goal.
Why Have a Family Business?
Family businesses come with many benefits. Hypothetically, when you’re all working toward a common goal, you’ll work harder.
When kids grow up in the family business, the learning curve is much shorter. Trust is not guaranteed, but it’s certainly easier to navigate known challenges. There are certain tax advantages too, but ultimately, you’re providing a legacy for generations to come, and that’s usually an overarching goal.
Everybody has a stake in the company, so if the vision is shared, then all should be well.
Of course, as with anything, you have to consider the cons. Psychological factors within the family have a significant impact on the success of the enterprise.
Family Rivalry – Even Without the Family
All families deal with some rivalry. When we’re talking about the family business, that tendency originates with the company’s founder.
Unresolved conflicts with a parent, difficulties accepting supervision, or dealing with authority – according to Levinson, these are often the reasons for starting one’s own business. It is a very personal mission, one that is meant to prove worth, merit, and superiority. It goes beyond what you can accomplish and borders on an “I’ll show you” dynamic.
Since the objective for starting the business is autonomy, anybody who appears to be a threat, whether it’s a family member or hired employees, could quickly find themselves on the outside looking in.
In the effort to scale up, one of the first things that we talk about is the need to establish strong second-tier management. Sometimes, when the skill sets aren’t extant within the organization, we advocate bringing in subject matter experts to train and educate. Still, this approach can derail if it’s not managed with some transparency and foresight.
Illustrative of this scenario, Levinson talks about a situation in which the founder lures talented young workers with promises of exciting promotions and then sabotages their efforts by withholding organizational support for their assignments. He does not allow them to make their own decisions from day-to-day, but he does provide them with incredible benefits. The result is that the employees are, on the one hand, very angry with their working circumstances, but on the other hand, they feel guilty for feeling that way. After all, he is a kind and generous person.
While these employees are not family, per se, they are being treated to paternal behavior, reward and punishment. As a result, the founder is ensuring he will never have a rival. If we are to overcome this rivalry, we have to look at the root cause—in this case, the unresolved parental/authority conflict—and deal with that so that the business can move forward.
Of course, there are many more types of rivalries, but the father-son dynamic is significant.
Here are some examples of father-son rivalry and how it can negatively impact the family business:
The father has a problem delegating authority and will not retire, despite stated intentions to do so. He wants to pass the company to his kids but feels that if he lets go, he loses a part of himself. Because of this, he continues to assert himself, creating feelings of rivalry in his children.
Broken promises, lack of autonomy, and constant intrusions lead to frustration, anger, and the king of all conflict – resentment. There is resentment around being kept in a subordinate role, despite having the right qualifications.
Depending on your father for your income, title, promotions, and everything else is never desirable in adulthood. It spurs feelings of inadequacy, hostility, and guilt for feeling that way. The authority figure, on the other hand, whether it’s the father, mother, or older sibling, sees the younger family member as ungrateful and unappreciative.
These conflicting factions have two effects:
The younger family member continues to wait in the wings, often because they genuinely want the job and feel like their chance is just around the corner. They usually wait long past what would be a “normal” age to take over an executive position in their industry, either because they want to believe the promises they’ve been told or because of a sense of familial loyalty, or even guilt. Think about it – what would you do if your mother said, “You can’t leave now; your father needs you!”
The founding family member continues to keep the younger one under their thumb and prevents him/her from moving on in any way possible. Whether it’s by undermining efforts to move forward in another venture or interfering in any attempt to improve the existing business, the results are the same.
In conclusion, secession in the family business is rarely easy. But, understanding the dynamics that prevent it from moving forward successfully helps to drive the process forward.
Reach out today to learn more about what conflicts are preventing your family business from reaching its goals.